Investment Allowance and Private Corporate Investment in India

Corporate Investment in India J V M Sarma This paper examines the impact of investment allowance on the corporate sector. This is attempted in an integrated model of corporate behaviour covering its three major aspects, namely, investment, financing and dividend decisions. It is essential to study the effect in an integrated model as the tax provisions relating to investment allowance contain a bias in favour of internal financing and thereby have a tendency to alter the pattern of financing new investment.